Carbon Offsets Workshop. May 10, 2011 AgSTAR National Conference Boise, ID

Transcription

1 Carbon Offsets Workshop May 10, 2011 AgSTAR National Conference Boise, ID

2 Agenda 2:00 Introduction to the Climate Action Reserve and the Livestock Project Protocol Max DuBuisson, Climate Action Reserve 3:10 Project Monitoring & Verification Nick Facciola, LRQA Americas Sustainability, Inc. 3:40 Break 3:50 Project Development & Case Study Peter Freed, Terra Pass 4:25 Project Development & Case Study Lauren Wittig, Camco International 5:00 Adjourn

3 Introduction CLIMATE ACTION RESERVE

4 Background North American carbon offsets program Chartered by CA state legislation in 2001 Mission is to encourage early voluntary actions to reduce emissions and to have such emissions reductions recognized Initially focused on emission reporting and reductions by member organizations (as the California Climate Action Registry) Now on emission reduction projects generating offsets Balances business, government, and environmental interests

5 What We Do 1. Develop High Quality Standards Convene stakeholders and lead development of standardized protocols for carbon offset projects 2. Manage Independent Third Party Verification Training and oversight of independent verification bodies 3. Operate a Transparent Registry System Maintain registry of approved projects Issue and track serialized credits generated by projects (Climate Reserve Tonnes = CRT)

6 Separation of Roles Is not affiliated with the State of California Reserve does not fund or develop projects Does not take ownership of offsets Is not an exchange Is a 501(c)3 not-for-profit organization Independent third-party verification Consistent with international standards Accreditation done by ANSI Assiduous oversight of verifiers

7 Transparency Unparalleled transparency makes the Reserve unique Public reports include: All protocols and associated documents List of all account-holders List of all projects and all project documents List of all issued CRTs for every project All retired CRTs

8 Reserve Project Types Forestry Improved forest management Avoided conversion Reforestation Urban forestry Livestock methane capture (US & Mexico) Ozone Depleting Substances (US & Article 5 sources) Landfill gas capture (US & Mexico) Organic waste digestion Coal mine methane Nitric Acid Production Organic Waste Composting

9 Offset projects in the Reserve May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 Listed Registered

10 Reserve stats CRTs registered 12.5 million CRTs retired 1.9 million Account holders 369 Projects submitted 407 New 110 Listed 202 Registered 95 U.S. States with Projects 45 Recent prices ~$7-8 per CRT for Livestock ~$2-4per CRT for other protocols

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12 California Assembly Bill 32 CAP-AND-TRADE IN CA

13 Cap-and-Trade in California Assembly Bill 32 passed in 2006, cap-and-trade regulation adopted in Dec 2010 Program begins Jan 1, 2012 and runs through 2020 Divided into three compliance periods of 3 years each Narrow scope for 1 st period, broad scope beginning Jan 1, 2015 Must have compliance instruments equal to your emissions for each year Allowances: most allocated at the beginning, but auctioned in future years; issuance reduced annually Offsets: can be used in place of allowances on a limited basis

14 Who s covered? NARROW SCOPE Electricity Generation Imported Electricity Cement Plants Hydrogen Plants Cogeneration Facilities Refineries Other Industrial (>25k MT CO 2 e) BROAD SCOPE Narrow Scope Sources plus Fuel Suppliers: Gasoline Distillate Propane Natural Gas Ethanol General Stationary Combustion (>25k MT CO 2 e)

15 California Carbon Market Compliance Period First (narrow scope) Second (broad scope) Third Year Allowance Budget (mt CO 2 e) ,800, ,800, ,700, ,500, ,400, ,400, ,300, ,300, ,200,000 Potential Offset Demand 39,064,000 91,784,000 83,104,000

16 Carbon Offsets The premise: Reductions in GHG emissions are less costly for some emitters than others, so it is economically efficient for one emitter to pay another for a reduction in GHG emissions Three types of markets: 1. Voluntary individuals and organizations purchasing carbon credits outside of any regulatory mandate 2. Compliance credits that are transacted with the goal of satisfying some regulatory mandate, such as AB32 3. Pre-compliance speculation that precedes acceptance in a compliance market

17 Offsets for Compliance Up to 8% of an entity s compliance obligation Example: If your emissions are 500,000 mtco 2 e, then you can apply up to 40,000 offsets towards that period Two types of offsets, functionally equivalent: Early-Action Offsets Start dates no later than Jan 1, 2012 Vintages accepted from 2005 through 2014 ARB Compliance Offsets Start dates no earlier than Jan 1, 2007

18 Offsets for Compliance ARB will assess and approve third-party protocols and accredit third-party registries to issue offsets Four Climate Action Reserve protocols have been adopted, more will be considered later The process is not yet determined for becoming an accredited registry, but the Reserve will apply as soon as is possible The Reserve program will be coordinated with the ARB program to ensure a steady supply of offsets for the CA market ARB will have its own guidelines for verification, and will accredit independent verification bodies

19 Offsets Contracts CA contracts already traded, but activity has been limited due to market concerns Uncertainty due to Superior Court ruling ARB credit invalidation Under ARB, holders of credits responsible for replacing them if they are invalidated Buffer pool for all offsets or insurance products? Reserve requires explicit title to reductions and assigns responsibility to project developer and/or verification body

20 Regulatory Next Steps There are still many unknowns that are being finalized What is the process for project developers? What is the process for covered entities? Allowance allocation details ARB staff are continuing to update the regulation this year, final changes to be adopted October day public notices, as well as other public workshops, expected through in the summer Delays are inevitable, especially with the current court battles

21 Livestock Project Protocol V3.0 LIVESTOCK PROTOCOL

22 What is a Project Protocol? Project protocols provide guidance for specific project activities Project definition Eligibility criteria Tests for additionality Quantification boundaries Quantification methodologies Monitoring and metering requirements Verification guidance

23 The Big 5 Tests REAL It can be accurately measured. ADDITIONAL Occurs outside of any regulatory requirement Including outside capped sector Would not have occurred but for the incentive provided by a GHG market. VERIFIABLE It can be independently verified. ENFORCEABLE Its ownership is undisputed. PERMANENT

24 Protocol Development Process 1. Literature review 2. Scoping/kick-off meeting 3. Multi-stakeholder workgroup formation 4. Draft protocol to workgroup 5. Revised draft released for public comment 6. Public workshop 7. Adoption by Reserve board in public session It is unique for a non-profit Board to meet in public

25 Project Protocol Components Define the GHG reduction project Section 2 Determine eligibility Section 3 Establish the GHG assessment boundary Section 4 Calculate GHG reductions Baseline emissions Project emissions Section 5 Monitoring requirements Section 6 Reporting requirements Section 7 Verification guidance Section 8 25

26 Project Definition installation of a biogas control system that captures and destroys methane gas from anaerobic manure treatment and/or storage facilities on livestock operations. The BCS must destroy methane gas that would otherwise have been emitted to the atmosphere in the absence of the project from uncontrolled anaerobic treatment and/or storage of manure. 26

27 Inclusions All digester technologies (ambient temp and heated covered lagoons, mesophilic plug flow, complete mix tanks etc.) All control options as long as the ultimate fate of the methane is destruction. Onsite destruction (flare, engine, boiler, etc.) Transported offsite via a transmission/ distribution pipeline for destruction Destruction in/for vehicle power Centralized Digesters 27

28 Exclusions Digesters installed at operations where the primary preproject treatment method was aerobic (i.e. composting, dry lot storage) GHG reductions from other activities and changes in operations not associated with installation of a BCS Greenfield sites in geographic locations where anaerobic lagoons are not common practice Poultry, beef, horse (or other non-dairy or swine) farms CO 2 reductions associated with displaced grid-electricity and/or offsite fossil fuel use N 2 O sources within the physical boundary (conservative) 28

29 Eligibility Rules I: Location II: Project Start Date III: Anaerobic Baseline IV: Additionality V: Regulatory Compliance U.S. and its territories No more than 6 months prior to project submission Demonstrate anaerobic baseline conditions Meet performance standard Meet Legal Requirement Test Compliance with all applicable laws 29

30 Start Date Start date is the date at which BCS becomes operational Date can be chosen by project developer, must be within 6 months of when digester first starts producing and destroying methane gas (allows for a 6 month start-up period) Mexico start date is date at which methane first produced and destroyed 10 year crediting period, renewable once under most current protocol 30

31 Anaerobic Baseline Requirement All Livestock operations must demonstrate that the baseline manure treatment was an open anaerobic lagoon, with a depth of at least 1 meter This is a key element of verification, and the project developer will need to provide evidence of the pre-project manure management system 31

32 Greenfields Greenfield livestock projects (i.e., projects that are implemented at new livestock facilities that have no prior manure management system) are eligible only if the project developer can demonstrate that uncontrolled anaerobic storage and/or treatment of manure is common practice in the industry and geographic region where the project is located. 32

33 Performance Standard Must meet a Performance Standard Threshold representing better than Business as Usual Technology specified threshold collection and destruction via a biogas control system (BCS) Installation of BCS where not required to by regulation Performance Standard based on evaluation of US /Mexico livestock manure management practices Specifically, the market penetration of manure digester systems 33

34 Legal Requirement Test US: Must meet an initial LRT assessing if project reductions would have occurred as a result of federal, state or local regulations (FSL) Demonstrate no regulation requiring installation of manure digester system Mexico: Once, at the time of the project s registration Crediting period not affected if rules change during the crediting period Must meet an annual LRT assessing if project reductions would have occurred as a result of federal, state or local regulations (FSL) Crediting period lasts from start date until date at which Legal Requirement to install BCS comes into force 34

35 Verification of Legal Requirement Test Project developers are required to submit a signed Attestation of Voluntary Implementation: US - During first verification MX - For each verification Monitoring Plan must include procedures to demonstrate eligibility Attestation of Voluntary Implementation does not negate verifier responsibility Verifier must conduct a risk-based review for Legal Requirement Test Confirmed once per reporting period 35

36 Regulatory Compliance Projects must be in material compliance with all applicable laws. Air, water permits Nutrient management CAFO No credits may be issued for periods of material non-compliance 36

37 Quantification OR 37

38 Data Requirements Site specific data requirements for calculations: Livestock population by category Monthly average temperature Baseline manure handling data (what waste went to what storage/treatment system) BCS collection and combustion efficiency Biogas flow, temperature, pressure CH 4 content Non-BCS waste handling data CO 2 from stationary and mobile combustion 38

39 Reporting / Verification Options US V3.0 (and MX V2.0) allows for 3 options after project s initial verification and registration*: month maximum reporting period and verification cycle (standard cycle) month reporting period and verification cycle with desktop verification (every other year) month maximum reporting period and verification cycle * Initial verification must cover a minimum of 3 months (1 quarter) of emission reductions, and must include a site visit. Project developer may choose to utilize one option for the duration of a project s crediting period, or may choose different options at different points during a single crediting period

40 How it all works THE RESERVE PROCESS

41 Basic Steps 1. Account creation 2. Submittal 3. Listing 4. Verification 5. Registration

42 The Reserve Process Each reporting period Open an account Submit project Reduce emissions Verify the reductions Registered CRTs issued The process for creating compliance offsets is not yet determined, but will be similar to our current process Hold, sell, or retire CRTs

43 Verification Verification bodies (VBs) must get accredited to ISO standards by American National Standards Institute (ANSI) Lead Verifiers must take protocol-specific and general Reserve training VB submits NOVA/COI form and receives approval from Reserve to proceed Developer hires accredited and trained VB VB makes determination as to the accuracy of reported CRTs Project documents, verification report and verification opinion submitted to the Reserve

44 Buying & Selling CRTs Must have an account with the Reserve to hold CRTs No financial transactions within the system, only CRT transfers How to trade? Purchase directly from a Project Developer Purchase through a Trader/Broker/Retailer Purchase futures on an exchange Forward sales are very common

45 Information Sources DOCUMENTS Livestock Project Protocol V3.0 Errata & Clarifications to LS V3.0 Program Manual Verification Program Manual TRAINING Project Developer Training webinars (free for Account Holders) Verifier Training (in-person, usually Los Angeles)

46 More Information Program help: Technical help: Phone: (213)

47 Agenda 2:00 Introduction to the Climate Action Reserve and the Livestock Project Protocol Max DuBuisson, Climate Action Reserve 3:10 Project Monitoring & Verification Nick Facciola, LRQA Americas Sustainability, Inc. 3:40 Break 3:50 Project Development & Case Study Peter Freed, Terra Pass 4:25 Project Development & Case Study Lauren Wittig, Camco International 5:00 Adjourn